Introducing Taxes and Tax Incidence quiz #1 Flashcards
Introducing Taxes and Tax Incidence quiz #1
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Which of the following statements is true about taxes? Taxes are imposed by the government to fund public services and are shared between buyers and sellers, regardless of who is initially taxed. Which of the following is an example of a tax? A per unit excise tax on gasoline is an example of a tax. Taxes are included in which of the following? Taxes are included in the total price paid by consumers and affect the price received by suppliers. Which of the following are part of taxes on production and imports? Excise taxes, tariffs, and pollution charges are part of taxes on production and imports. Which of the following is a benefit from imposing a tax on a good or service? A benefit is that the government collects revenue to fund public services. What is the amount of deadweight loss after the government imposes an excise tax on the market? Deadweight loss is the reduction in total surplus due to the decrease in quantity exchanged after the tax is imposed. Taxes influence which of the following decisions? Taxes influence decisions about how much to buy or sell in a market. Which of the following statements concerning taxation is accurate? Tax incidence is shared between buyers and sellers, regardless of who is taxed. What happens to the total surplus in a market when the government imposes a tax? Total surplus decreases due to the creation of deadweight loss. Which situation is an example of indirect taxation? A per unit excise tax on sellers is an example of indirect taxation. Which statement about taxes is accurate? Taxes create a difference between the price buyers pay and the price sellers receive. How much of the $6 tax is paid by the suppliers? The amount paid by suppliers depends on tax incidence, which is determined by the relative elasticities of supply and demand. Which of the following are the effects of taxes? Taxes decrease the quantity exchanged, increase prices for buyers, decrease prices received by sellers, and generate government revenue. Why are there different types of taxes? Different types of taxes exist to target various sources of revenue and address different policy goals. What effect would a tax increase have on income? A tax increase reduces disposable income for buyers and revenue for sellers. What is the amount of government revenue after the government imposes the excise tax on the market? Government revenue equals the tax per unit multiplied by the quantity sold after the tax. Which of the following will result in a decrease in the supply of money in the economy? An increase in taxes can decrease disposable income and reduce spending, indirectly affecting the supply of money. How does the concept of deadweight loss apply to a per unit tax? Deadweight loss represents the lost surplus from trades that no longer occur due to the tax. Is tax extra money we have to pay on the things we buy? Yes, a tax is extra money added to the price of goods or services, paid to the government. Which of the following quantities decrease in response to a tax on a good? The equilibrium quantity exchanged in the market decreases. The term tax incidence refers to: Tax incidence refers to how the burden of a tax is divided between buyers and sellers. A tax imposed on the sellers of a good will: A tax on sellers shifts the supply curve to the left, raising the price buyers pay and lowering the price sellers receive. A pollution charge is a form of tax imposed on: A pollution charge is a tax imposed on producers who generate pollution. The revenue collected from a tax equals: The tax per unit multiplied by the quantity sold after the tax is imposed. A tax is a payment made to: A tax is a payment made to the government. An increase in the excise tax on gasoline: An increase in the excise tax on gasoline raises its price, reduces quantity sold, and increases government revenue. A tax on the buyers of cameras encourages: A tax on buyers discourages purchasing, reducing the quantity demanded. In the presence of a tax on suppliers: The supply curve shifts left, and both buyers and sellers share the tax burden. Jerry recently paid $20 in tolls for the Florida Turnpike. Is the $20 payment considered a tax? Yes, tolls are a form of tax collected by the government for public services. The government relies on taxes to: The government relies on taxes to fund public services such as education, police, and fire protection. The vertical distance between points A and B represents a tax in the market. What does this distance indicate? The vertical distance represents the per unit tax, showing the difference between the price buyers pay and the price sellers receive.
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